A rift within Japan’s government over legislation to fight climate change has raised the risk of it watering down plans for an emissions trading system that is at the core of its drive for greener policies.
In its latest draft for a climate bill expected to be submitted to parliament next Friday, the environment ministry is vague on details of how the scheme would set emission limits and when trading would start.
The environment ministry has favoured setting volume caps on emissions. But the Ministry of Economy, Trade and Industry (METI) has called for caps per unit of production, which would allow emissions to rise when businesses increase output.
METI is under pressure from companies worried about limits on greenhouse gas emissions restricting growth.
“We are not ruling out volume caps, but considering the need for economic growth, carbon intensity targets should also be included in the scheme,” METI minister Masayuki Naoshima told a news conference on Friday.
A national scheme that sets tough targets on greenhouse gas emissions could be a major boost for the carbon market, depending on the design.